WACC Analysis Information

1. The WACC (discount rate) calculation for Simpson Manufacturing uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Simpson Manufacturing over the long term. If there are any short-term differences between the industry WACC and Simpson Manufacturing's WACC (discount rate), then Simpson Manufacturing is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Simpson Manufacturing's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Simpson Manufacturing uses a significant proportion of equity capital.

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